Dow slides; another record for Nasdaq

JulieRannazzisi

NEW YORK (CBS.MW) -- Hit by a round of profit-taking, the Dow took it on the chin Thursday while the Nasdaq, buoyed by a smattering of positive earnings releases, set a record for a second straight session.

"We succumbed to some profit-taking, [which] is not surprising," said Bryan Piskorowski, market analyst at Prudential Securities.

Many of the blue-chip stocks that faltered are the ones that ran-up significantly in recent weeks, noted Art Hogan, chief market analyst at Jefferies & Co.

The Dow Jones Industrial Average
DJIA, +0.10%
fell for a third straight session, dropping 138.06 points, or 1.2 percent, to 11,351.30, with the largest losses in Alcoa, Caterpillar, Intel and Philip Morris. Capping the downside were gains in American Express, IBM and Merck.

There's been a tug-of-war between rising interest rates and positive earnings since the start of the week, Piskorowski noted. Bond prices faltered on Thursday, failing to lend support to the broader market.

The Nasdaq Composite
$compq
gained 38.22 points, or 0.9 percent, to 4,189.51. It's the tech gauge's third record close this year.

The quarterly results had pleasant upside surprises for tech stocks, said Ned Collins, head of trading at Daiwa Securities.

But the market's generally good performance since the start of the year boils down to money flows, Collins said. People continue to look for places to put their money to work, he added.

Within the tech sector, and ascended, as did the networkers. (See 1-year chart of Philadelphia Semiconductor Index and Goldman Sachs hardware index.)

In the broader market, bank and brokerage stocks fell, as did pharmaceuticals, oil service and gold shares.

Volume was very heavy, with a total of 1.10 billion shares changing hands on the NYSE and 1.84 billion trading on the Nasdaq Stock Market. The Nasdaq's volume was a record, beating the 1.78 billion shares traded on Dec. 9. Losers beat winners by 18 to 12 on the Big Board and by 21 to 20 on the Nasdaq.

The market is showing initial signs of broadening, Piskorowski said, which he believes is a huge a positive. The market's gains this year, he said, are allowing other players to join in, such as the small-caps.

Investors' skittishness remains high, however, which is evidenced by the market's huge price swings on a day-to-day basis.

"We wouldn't see this kind of volatility if we weren't playing from such an elevated platform," Piskorowski observed.

"There's a lot of confusion out there," Collins said, which explains the swift rotations from sector to sector.

In the bond market, prices were extremely choppy and resumed their downward trajectory in afternoon dealings after briefly climbing into positive territory earlier in the session. The intermediate sector, particularly the 10-year note, was the hardest hit.

On the economic front, the U.S. trade gap surged to a record $26.5 billion in November compared to October's $25.6 billion and expectations for a $25.4 billion deficit. See full story. Additionally, weekly jobless claims fell 39,000 to 272,000.

Friday will see the release of the December Treasury budget statement. View and .

Turning to specific issues, Lucent Technologies posted a fourth-quarter profit of 36 cents a share after the close Thursday, missing the First Call estimate by a penny. Earlier this month, Lucent warned profits would fall short of Wall Street projections. Shares added 1 9/16 to 53 ahead of the news and dipped to 52 3/4 in Instinet after-hours dealings. See story. The company
lu
was upgraded by Chase H&Q to its "buy-focus list" from a "buy" ahead of its earnings news Thursday. In other news, Lucent said it will purchase Agere, a high-speed chipmaker, for about $415 million in stock.

Sun Microsystems announced after the close that its second-quarter profit came in at 21 cents a share, beating the First Call estimate by a penny. The company's
SUNW, +1.35%
shares fell to 83 1/2 in after-hours trading after ending up 3 5/8 to 86 9/16 in regular hours. See full story.

Gateway
gtw
matched Wall Street's lowered earnings expectations when it reported results after the close. The company, which issued a profit warning two weeks ago, registered a fourth-quarter profit of 42 cents a share. Shares ended up 1 7/8 to 58 3/4 ahead of the news. See story.

IBM shares climbed 1 7/8 to 121 3/8. After the close Wednesday, the Dow component
"
posted a fourth-quarter profit of $1.12, beating the First Call estimate by 6 cents despite a drop in revenue of 4 percent in the quarter. The Y2K issue hit the company hard in the fourth quarter, IBM said. See related story. The company was upgraded by CIBC World Markets, Merrill Lynch and Robertson Stephens. See Rating Revisions.

Apple Computer surged 6 15/16 to 113 1/2. The company
AAPL, +1.00%
checked in with a first quarter profit of $1 a share vs. the First Call estimate of 90 cents a share after the close Wednesday. Earnings were buttressed by continuing strong sales of Apple's IMac and IBook computers. See story. The company received upgrades from Prudential Securities, Salomon Smith Barney and SG Cowen & Co.

America Online
aol
shed 11/16 to 64 3/16. The company posted a second-quarter profit of 9 cents a share compared to the Wall Street estimate of 8 cents a share. The Internet giant ended the quarter with 20.5 million subscribers. See full story. The company was downgraded by Dain Rauscher to a "buy" from a "strong buy" to reflect its changing dynamics and valuation following its merger with Time Warner
TWX, +0.01%
Meanwhile, Donaldson Lufkin & Jenrette raised its price target on the company to $120 from $100. Advanced Micro Devices
AMD, -2.67%
said it earned 43 cents a share in the fourth-quarter, blasting past the First Call estimate calling for a profit of a penny a share, thanks to strong seasonal consumer demand for personal computers. AMD lost 72 cents in the third quarter of 1999. Still, shares ended down 3 to 38, erasing earlier gains. Rival Intel
"
lost 4 7/16 to 95 5/8. See Earnings Surprises and full story.

Altera
ALTR, -1.18%
shares jumped 10 3/4, or 18.1 percent, to 70 1/4 after the company said late Wednesday that it earned 31 cents a share in the fourth quarter, a penny ahead of the Wall Street estimate. ABN Amro raised its price target to $90 from $75 and reiterated its "buy" rating.

Lattice Semiconductor
LSCC, -0.57%
jumped 6 1/2 to 59 15/16. The company announced that it earned 42 cents a share in the third quarter compared to the First Call estimate of 37 cents a share. Banc of America upgraded the stock to a "strong buy" from a "buy" and raised its price target to $80 from $70.

Redback Networks, meanwhile, dropped 5 7/8 to 200 1/8. The company
rbak
posted a profit of 4 cents per share in the fourth quarter, beating the First Call estimate by 3 pennies. Jefferies initiated coverage on the stock with a "hold" rating.

Legato shares dropped 23 7/8 to 29 3/4 after the company
lgto
reported late Wednesday that it earned 11 cents a share in the fourth quarter, 8 cents less than the First Call estimate. Legato also restated third-quarter earnings, which were changed to 14 cents a share from 18 cents. See Screamers. The company received downgrades from CIBC World Markets, Salomon Smith Barney, Banc of America and Dain Rauscher.

Two Dow components unleashed their quarterly results Thursday. General Motors
GM, +1.36%
checked in with a fourth-quarter profit of $1.86 a share, surpassing the First Call estimate by 5 cents. See full story. And General Electric
GE, -0.27%
checked in with fourth-quarter earnings of 93 cents a share, a penny ahead of the First Call estimate. See story.

GM shares inched up 3/4 to 82 1/4 while GE shed 2 25/32 to 145 15/16. Sears Roebuck
S, -0.46%
shares fell 1 11/16 to 32 1/16 even as the company registered a fourth-quarter profit of $1.98 a share, surpassing the First Call estimate of $1.77 a share. See story.

Meanwhile, Wit Capital
witc
posted a fourth-quarter loss of 13 cents a share. The two analysts surveyed by First Call had expected a 14 cent- per-share loss. In the same period a year ago, Wit lost 45 cents a share. The stock fell 3/4 to 15. See full story.

CIBC World Markets downgraded Alcoa
AA, +0.10%
and Alcan Aluminum
AL, +0.00%
to a "hold" from a "buy" based on expectations of near-term metals price weakness and profit-taking in the stocks. Alcoa was one of the Dow's laggards Thursday, shedding 4 7/16 to 73 11/16, while Alcan lost 2 7/16 to 40 3/4.

Visx
visx
tumbled 13 1/8, or 28.9 percent, to 32 1/4 despite matching earnings results late Wednesday. The company said it earned 38 cents per share, up from 26 cents in the same period last year and in line with the First Call estimate.

I2
itwo
shares jumped 41 1/2 to 256 1/2 after announcing it earned 19 cents a share, beating the First Call estimate by 3 cents a share. The company was upgraded to a "strong buy" from a "accumulate" by Prudential Securities. In currency markets, dollar/yen was recently changing hands at 105.35, up 0.1 percent from the previous close, while euro/dollar rose 0.4 percent to 1.01740. See international indices and view currency rates.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.